TGF-Beta signal transduction pathways play important roles in patterning during development of organisms as diverse as Caenorhabditis elegans, Drosophila melanogaster, mice, and humans. Smad proteins function as transcription factors in TGF-Beta signal transduction pathways in all of these organisms, and have been implicated in cancer in humans, underscoring their importance in developmental processes. The Smad protein family was first identified with the discovery of the Mad gene, which functions downstream of the TGF-Beta homologue dpp in Drosophila. Study of loss-of-function mutations in Mad have revealed that it is required for patterning of the adult retina in Drosophila. Because the Drosophila adult retina is amenable to study and has already been extensively characterized, it is ideal for elucidating the mechanisms by which Mad and the dpp pathway function during development. Studying the effects of a constitutively activated Mad protein on retinal development will lead to a greater understanding of the role of Mad and the dpp pathway during retinal development. Using mutations in Mad to analyze the interactions between the dpp pathway and other genes apparently involved early in retinal development in both Drosophila and vertebrates, will clarify the relationships between dpp and these genes. Finally, identifying genes able to interact with Mad will reveal the mechanisms of dpp signal transduction, as well as additional genes involved in retinal development.